THE NEW ENGLAND governors met behind closed doors on energy issues in Hartford on Thursday and vowed afterwards to work collaboratively to expand the region’s natural gas pipeline capacity.
What shape that collaboration will take was unclear, as a seven-paragraph statement issued by the governors after their meeting offered no specifics. The plain-vanilla statement blamed the region’s high electricity prices on “a lack of natural gas pipeline infrastructure” and the retirement of non-gas power plants. The governors said they would coordinate policies jointly while taking action individually.
“We all believe this is a crisis and collective action needs to be taken,” said Connecticut Gov. Dannel Malloy, who was joined at a press conference by Govs. Charlie Baker of Massachusetts, Gina Raimondo of Rhode Island, Peter Shumlin of Vermont, and Paul LePage of Maine. New Hampshire Gov. Maggie Hassan was attending a funeral in her home state and sent some of her top aides in her place.
The region’s electricity crisis has been building the last few years. Existing natural gas pipelines coming into the region are operating at or near capacity. On winter days, when the temperatures plummet and the demand for gas for home heating rises, power plants that run on gas have been unable to get enough fuel, forcing the substitution of more expensive alternatives. The result has been price spikes that have sent consumer electricity bills to record levels.
Elin Katz, a Connecticut consumer official, said winter 2015 electricity prices averaged 17.34 cents a kilowatt hour across New England compared to a 12.81-cent average across the three states of New York, New Jersey, and Pennsylvania. Malloy said the price spikes collectively added about $7.5 billion to the region’s electricity tab over the last two winters and LePage said the high costs put the region at a competitive disadvantage.
Government intervention in the market is needed, Malloy said. “The marketplace itself has not resolved this issue,” he said. “If I made $7.5 billion, I’m not sure I would resolve the situation.”
Numerous companies want to build pipelines that would bring relatively cheap natural gas from Pennsylvania into New England. Other companies want to build electric transmission lines that would bring in hydroelectric power from Canada and wind power from northern Maine. The work can’t begin until the states figure out who will pay the billions of dollars needed to build these projects.
Judging from comments made at Thursday’s gathering at the Connecticut Convention Center, officials from Massachusetts, Connecticut, Rhode Island, and Maine seem on board with splitting the costs among their ratepayers. Matthew Beaton, the secretary of energy and environmental affairs in Massachusetts, said the participation of New Hampshire and Vermont is more iffy. New Hampshire is where some of the proposed pipeline and transmission projects would be located.
“The biggest challenge is who is paying for it,” Beaton said of the proposed pipeline and transmission projects. Still, he said, the meeting of the governors was a big step forward. “It’s very powerful,” he said. “It shows the unity.”
The New England governors have been down this road before. In December 2013, they agreed to explore a regional solution to the high cost of electricity and proposed paying for new gas pipeline and transmission lines with a tariff on the wholesale price of electricity. That approach was simple and straightforward, but officials at the Federal Energy Regulatory Commission viewed it as too interventionist in local markets. Former Massachusetts governor Deval Patrick pulled back his support in the face of opposition from state lawmakers and environmentalists.
The new approach outlined by the governors on Thursday is far more complicated and politically challenging. The governors would agree on a policy framework but individual states would carry out those policies as they see fit.
Baker, while not committing to any specific course yet, seemed comfortable with the regional approach. He noted that he has been pushing for Canadian hydroelectricity for more than five years and favors an “all-option approach” on energy.
Environmentalists are wary about building more pipelines carrying fossil fuels into a region that is already heavily reliant on natural gas. They favor the development of renewables and the promotion of energy efficiency measures.
Gordon van Welie, president and CEO of ISO New England, the region’s power grid operator, said the region relies on natural gas for 44 percent of its electric energy production, a percentage that is likely to increase over the next decade as coal, oil, and nuclear power plants retire. He said natural gas shortages this winter were dealt with by importing liquefied natural gas and shifting more electricity production to oil and coal, which generate more pollutants.
“There are alternatives to burning fossil fuels, such as renewable energy,” van Welie said in a talk prior to the governors meeting. “While these resources can offset the need for gas, they are unlikely to be developed in sufficient quantity in the time frame needed. There is also the operational reality that renewable resources cannot be fully relied on when our demand is highest in the winter months. The one possible exception is imported hydro energy, but only if the delivery of that energy has been guaranteed, since our neighbors to the north also experience high demand for that energy during cold periods.”
According to 2014 data, solar and wind power currently meet only a tiny portion of the region’s energy needs, less than 2 percent.
Patrick Woodcock, director of LePage’s energy office, said Maine is losing manufacturers because of the high cost of electricity, but needs the help of the other New England states to address the problem. “This problem requires regional cooperation. There is no way one state can handle this problem on its own,” he said. “We’re one regional energy market. We need one regional energy plan.”
Malloy echoed that theme. “We’re either going to solve these problems together or suffer the consequences in our individual states,” he said.
People really need to look into the actual monthly costs. Data from 2013 show that while CT is in the top 10 for average monthly bills, ME is among the lowest 10 in the country. Parts of the country with lower rates, but higher average consumption, actually outspent NH. Check it out here: http://www.eia.gov/electricity/monthly/update/archive/march2015/ scroll down to see residential electricity bills. Also, there is a graph from ISO-NE that shows we paid MORE on average between 2004 and 2009 than we have between 2010 and 2015. Yes there are two narrow spikes, but those are currently under investigation by the NH PUC and, going forward, the Winter Reliability will address those spikes. Do you remember the bump in Social Security payments and mileage reimbursement rates back in 2008? Oil prices were extremely high back then (and since natural gas prices track oil prices) and so was natural gas. As long as we depend so much on fossil fuels, we will experience constant and increasing fluctuations in market pricing. NY has low gas prices and lots of pipeline, but equally high electricity prices. Why would that be? The fuel is a small part of the overall cost. NE and NY have higher labor, real estate and transportation costs which all contribute to higher prices. CA is powered mostly from natural gas, but is also among the top ten in the nation for electricity prices. Cost of living is a big factor in our electricity rates. So are &%^#* decisions like putting a 1/2 Billion $$ scrubber on a coal plant you plan to retire or building $$ Billions in natural gas pipelines which will mostly be used for export (leading to higher domestic prices ultimately!).
As far as burning oil or coal having a negative impact on the environment, recent studies show that if you take the entire environmental impact from production to burn cycle into account, fracked gas is every bit as polluting as coal or oil! At this point, NH only burns oil and coal when there are natural gas shortages. That percentage is less than 4% on an annual basis (though admittedly higher during Winter months). Why rush into building all this expensive pipeline infrastructure when you could achieve lower monthly bills, lower Winter peaks, and reduced demand through Energy Efficiency programs and occasionally burning coal or oil until they can be replaced with other Demand Response and renewable resources?
Adding natural gas pipelines and encouraging more natural gas electricity generation.only makes the problem worse. What happens if PA bans fracking AFTER we build the pipeline? Oklahoma government agencies are just beginning to admit that fracking has caused a dramatic increase in earthquakes due to fracking. This is a BAD investment for New England. It chains us to the past and can be considered little more than a welfare program for the dying fossil fuel industry. They want our land to build pipelines in the hope they can convert that fracked gas to LNG for international export.
Stop the pipelines! Invest in Energy Efficiency and Renewables!
So,
here’s where she got her numbers. She is using the average price across
all sectors. Please notice that NY residential rate is over 19 cents
and they have PLENTY of pipelines and cheaper gas. http://www.eia.gov/elect…/monthly/epm_table_grapher.cfm…
What disappoints me is that the discussion about ratepayers paying for it has never been presented to the ratepayers if they want it. New Hampshire residents clearly do not want the gas transportation lines through their state. No one also is talking about how most of this gas is for export. So ratepayers pay for the project and the gas gets shipped out. In a recent Kinder Morgan open house in Rindge, when the question about export was posed to the Kinder Morgan leadership team, they gave a “pass the buck” response and stated that they had no control over that. That they were just transporters. Um. Hello? (Can we knock on their foreheads and see if anyone is home?) How can they not be responsible for its TRANSPORTATION for export if they are the ones providing the route?????? It was voted down at every NH town meeting, so why on earth is this discussion still going? There are petitions (including one to Gov Hassan) with literally THOUSANDS of signatures from the NH citizens that we do not want this, so why is this project not squashed yet????
The only solution that can keep rates from skyrocketing is to reverse the policies and regulations that are forcing the early retirement of coal and nuclear off the grid. The same guys whose policies have created the problem by mandating renewable energy on the grid, are now telling us that the solution is to become solely dependent on natural gas for heat and electricity.
Phrases like “All of the above” and “Diversify the fuel supply” are an insult to public intelligence when the governors are clearly choosing to put all the eggs in the natural gas basket. As for bringing hydro power from Canada, think about it. We need quick acting flexible power for winter peak demand. While Canada will be glad to supply all the excess hydro power at times when domestic use is low, it is unlikely that they will send the power to New England when they need all the power they can get on cold winter days.
Let’s face it. Until renewable energy can power the grid without the help of natural gas, we need to continue burning coal and risk nuclear power. While everyone wishes to transition to a fossil fuel free energy economy ASAP, doing so prematurely as a region is full of unintended consequences. Among them are skyrocketing rates, job losses, and a dysfunctional economy
It is not well understood that we already have an extremely large amount of pipeline capacity coming from NY into MA and CT – almost 3.5 billion cubic feet a day when the total usage in MA in january on average is just 1.8 billion cubic feet a day! The “bottleneck” is from the wellhead in PA to Wright NY (and also from the wellhead to points south and west). These governors are being snookered.
Maybe not “snookered”, maybe something else. Is anyone in here getting that…um…Enron feeling?
I’m not sure regulations and renewables are the primary driver pushing out coal, oil and nuclear. For example, the article itself states we only use 2% solar and wind.
It appears that the primary driver pushing out coal, oil and nuclear is the national trend of cheap shale gas undercutting every other fuel. For example, the reason Entergy cited for shutting down Vermont Yankee was natural gas prices and the cost of maintenance.
The private markets don’t want to invest in generation that may get undercut by gas in a few years if the national trend emerges in New England (I don’t believe it will).
Given that, I completely agree with your premise that pushing for what could become an all-gas solution is wrong here. The governors are pushing for more gas to solve a gas-driven problem.
CT Governor Malloy’s logic is interesting; he states in this article: “The marketplace itself has not resolved this issue,” Malloy said. “And by the way, if I just made an extra $7.5 billion over the past two years
and I was the market, I’m not sure I would want to resolve this issue.”
Then in the action plan the governors released, it states: ” Specifically, the Malloy Administration
is seeking legislative enactment of Senate Bill 1078, which would authorize the Connecticut Department of Energy & Environmental Protection to solicit long-term contracts of resources—including natural gas capacity”
Bill 1078 has CT electric rate-payers subsidizing the pipeline
So the logic is that gas shortages made energy markets too much profit so they need to craft a gas subsidy?
Do these men know they are working in defiance of thousands of directly impacted people, and many others, organized in dozens of groups who are fighting these infrastructure projects for many good reasons? 1: the “need” has been faked, the market manipulated. 2: these pipelines are largely for export 3: pipelines destroy property rights and forests and many other living things, 4: compressor stations cumulatively for all these projects will emit MILLIONS of tons per year in Greenhouse Gas emissions and toxic VOCs, 5: FERC is a rogue agency which is violating our nation’s laws, failing to perform environmental reviews, and issuing permits to operators with shoddy safety and compliance records in violation of the Natural Gas Act. 6: Due to the extremely serious problem of Climate Change, these Fossil Fuel projects are taking us to the brink of global ecological collapse. — So while these men might be corrupted by O+G cash and blinded by greed, WE THE PEOPLE vow to mount a massive resistance, using the principles of nonviolence. #BXE
Pay attention to what MA’s secretary Beaton said in this article:
“The biggest challenge is who is paying for it,” Beaton said of the proposed pipeline and transmission projects.
MassDOER filed DPU Docket 15-37 that outlines how to use rate-payer electric service funds to underwrite the purchase of gas from new pipelines; see this quote in the docket:
“..allowing EDCs to contract for natural gas firm transportation capacity would require the net annual cost/savings to be reconciled through electric rates…”
Like CT and ME, MA is trying to get rate-payers to pay for the pipelines; the difference is that MA is burying the tariff. At the very least we should be more like VT and NH and let the markets sort it out. Heck, even FERC does not like it when governments subsidize the pipelines; as stated in their policy:
“In sum, if an applicant can show that the project is financially viable without subsidies, then it will have established the first indicator of public benefit.”
Gordon van Welie stated the region (New England) is at 44% gas generation (which is correct); note that Massachusetts, however, is at 63% gas generation. We bear the most risk in the region of a gas-dominant energy portfolio.
Here is what Gordon van Welie, head of ISO-NE said:
“The shift in New England’s resource mix is the result of two primary factors. Low-priced natural gas, for most of the year, is making it uneconomic for coal and oil plants to operate in the energy market. And policymakers are seeking to reduce carbon and other power-plant emissions through environmental policies. ”
He cites environmental policies as a primary cause. The present day low usage of wind and solar is not a factor. The market signal from policies and regulations is that the future grid will have a high penetration of wind and solar, and, in the absence of storage, baseload technologies using coal and nuclear will be phased out in favor of the more flexible natural gas that can convert from baseload to load following quickly.
no new fossil fuel infrastructure, lets go renewables now.
How about offering ratepayers incentive opportunities to invest in locally-generated renewable power from geothermal, solar and tidal generation? All of those energy sources are unlimited, uncontrolled and free beyond the infrastructure costs and don not pose the grave human and environmnetal risks that fossil-fuel delivery systems do. Gas and oil will deplete and leave the pipeline expense wasted, and most importantly our atmosphere cannot withstand the additional CO2 or methane burdens from hydrocarbon emmisions without hastening the total collapse of our global.climate. Local-sourced renewables are the only viable and sustainable option.
There is nothing natural about fracked gas! Poisoning people in shalefields so people can be duped into pipelines for export under the auspices of cheaper heat??? Really??? #FERCus
I see what you are saying. Let’s look at a counter-examples; if we remove clean air policies will the market invest in coal and oil plants even though cheap shale gas will undercut them on price? Unlikely.
If shale gas prices went though the roof would the market continue to build solely gas plants and shut down all coal and oil? Unlikely — they would more likely add air scrubbers to existing oil and coal plants because it would be more cost-effective.
I agree with both you and van Weile, clean air policies do have a part in pushing out coal and oil because they need to pay a larger portion of the cost of disposal of their by-products. It is just not the dominant part. There is a reason van Weile listed gas prices first in the quote.
I could buy the argument that cheap shale gas was forcing more expensive coal and nuclear off the grid if rates were trending downward. The fact that rates are increasing shows that policy, regulations, and future mandates for renewable energy are the dominant market signals.
I believe that if ISO-NE were free to guide the market towards the lowest cost to consumers, coal and nuclear would continue to dominate the supply of baseload power. Unfortunately, policies and regulations designed to transition the region to a fossil free energy future are a primary constraint on ISO-NE, and are having the unintended consequence of eliminating clean energy nuclear, along with coal. The net result is that little to no carbon emissions will be avoided.
Our rates are skyrocketing for nothing in return!
Hey Willie… Maggie… put the pot pipe down and start sucking on reality. You wanna be cave dwellers need to lead by example and get the frack off fossil fuels or shut the lie up
I think you might misunderstand ISO-NE’s role; they react to the market’s choices (they make supply match demand) they don’t guide the market. They are the system operator. For example, they dispatch (choose) the lowest price of what generation is available based on the current electric demand is from consumers. On that note, they claim they are “fuel neutral”.
The market is not choosing wind and solar. Those renewables are mandated by state policies and regulations. In a future grid, mostly powered by wind and solar, only natural gas and hydro are flexible enough to coexist on the grid reliably. It is that realization that is driving coal and nuclear into early retirement.
So if I understand it correctly, the argument is that the market fears that solar and wind uptake will be so fast that they have no choice but to use gas?
The US only uses 2% solar and wind and in Massachusetts, one of the more aggressive states, RPS is only 15% renewables by 2020. Even estimates going out to 2040 don’t see solar an wind becoming dominant.
I believe you have the correct argument but the wrong scale. A lively squirrel may influence and elephant but it is not going to push it out of the forest.
I wish I could post links here; do a search for a graph that shows the historical prices of coal, oil, nuclear and gas in the US. Gas plummeted and undercut them all. Even nuclear. The first time ever that *anything* undercut nuclear. It is staggering.
I admittedly skipped your electric price argument earlier because it is hairy; your logic is correct that if gas is undercutting everything that overall electric prices should fall. We have seen that to some degree nationally; electric prices generally always go up but in the last decade the rate of increase has slowed but there is no solid correlation. Given that gas is only 30% of national generation it will need to be a larger percentage to have more influence on the overall number and have a non-trivial correlation beyond the normal variability.
As for New England, last winter’s woes that caused this year’s price spike were not due to fuel prices but fuel congestion. Basically the market over-built gas generation capacity in anticipation of cheap shale gas owning the electric market.
Think of it like a black friday sale. The prices are so cheap that everyone bum-rushes the store, the sale items run out and anyone who needs to buy a gift ends up paying higher prices. We always need to keep the lights on so we can’t leave the store empty-handed.
So that brings us to the core debate — do we double the stock in one store by doubling our pipelines so everyone can benefit from the shale gas black friday sale or take a step back and ask if:
1) Is the sale going to last forever?
2) Is is really wise to do all our shopping at one store?
3) Is this the gift we really want?
Your arguments are sound based on the market assumption that all sources of electricity are of equal value to grid reliability. They are not. of equal value. Flexible generators like natural gas, oil, and hydro are more valuable than the relatively less flexible coal and nuclear. Intermittent and variable resources like wind and solar are the least valuable for reliability and need to be matched with equal amounts of flexible power of which NG is the most effective.
Personally, I think that the most wind and solar the grid can handle is about 10%. by energy (MWh), and that will come with about 50% penetration of wind and solar by power capacity (MW). Finally, it appears that in the absence of large scale energy storage, the RPS is unachievable, the grid will be burdened by at least twice as much capacity needed for peak demand, and the cost will be at least double.
I urge you to look at Texas. They are at around 10% penetration, and the state legislature is now moving to repeal the RPS.
Let’s use the industry term for the flexibility that underpins grid reliability. The grid needs to instantly match supply and demand at all times; the on-demand variable generation that matches supply and demand is called dispatch (without enough dispatch the grid would collapse).
Unfortunately your argument that predicted uptake of solar and wind is driving the gas boom is based on three false presumptions:
1) New England does not have enough dispatch to underpin predicted solar and wind
2) Dispatch is property only available to some generation
3) There is a hard upper limit on dispatch
#1 is the easiest of the three to dispel; no energy report I have read states New England is short on dispatch; even when predicted renewables are accounted for. This is intuitive; the region is already at 47% gas generation and Massachusetts is at 63% gas generation. More gas has no has no extra value due to dispatch advantage here; thus predicted renewables are not the primary driver for our gas boom.
Let’s, however, assume that dispatch were needed and examine #2, let’s look at the example of a cost-effective, reliable power source that has extra value to the grid due to dispatch: hydro. If one put a turbine in a river hydro would be very similar to wind; it would vary depending on weather and not be able to be controlled. The way that hydro is made dispatch’able is by putting a massive pond behind the turbines with a dam. There is no inherent need for gas and oil to supply cost-effective dispatch.
Similarly when non-dispatchable coal became the dominant fuel for electricity due to its low price in the industrial mid-west, they were not limited to gas and oil to supply the massive dispatch needed for factories; they pumped water up a hill into a pond at low usage times and released it into water turbines when usage was high (pumped hydro).
As for #3, 95% of Quebec’s power comes from a weather-dependent renewable power source: hydro. They just built the dams and ponds necessary to smooth it out and make it dispatch’able. There is no hard upper limit on variable power sources.
So the argument that predicted renewables and RPS are creating a need for dispatch which is in turn is the driver of the gas boom that is driving out all non-gas generation is false.
First, New England is not short on dispatch, even for predicted solar and wind. Second, if we were short on dispatch and other fuels were cost competitive there would be a push to just add dispatch ability to the cost-competitive fuel; much like the mid-west added dispatch to coal. Dispatch is just an additional cost; not a property only available to some sources. Lastly there are no hard limits on any generation source for reliability reasons. Yes, it becomes more expensive to add more storage for the most variables sources but there is no hard limit for reliability reasons alone.
So if predicted renewables and RPS are not the driver for the gas generation boom in New England, what is? It is really simple; the plummet in gas price undercutting all other generation sources. In fact, RPS is one of the few things keeping us from going all-gas generation.
Flexible and dispatchable are not synonymous. My understanding is that all power resources available to the grid can be dispatched with the exception of Variable Energy Resources (VER), wind and solar.
VERs are forced on the grid by the RPS. Single Cycle Natural Gas generators, which run with about half the efficiency of Combined Cycle units, have a distinct advantage over coal and nuclear when dispatched on a grid with large penetrations of wind and solar.
When policies and regulations signal that VERs will be forced on the grid at penetrations of 25% to 50% by the RPS, inflexible coal and nuclear plant operators know that even if natural gas prices increase, which will happen as the export market develops, their role on the grid will disappear because the extra strain from cycling and ramping coal and nuclear to satisfy future dispatch requirements is unbearable.
This is why van Welie cites policies and regulations as one of the primary causes for the increase in NG from less than 10% to more than 50%.
There is what the Commonwealth seeks, what the EDCs want, and the “stability” of “the grid”. And, then, there is the marketplace. No doubt there is volatility in explosive methane prices. No doubt Pilgrim is going/has gone away, although, to be fair, they were down 25% of the time last year anyway, most without warning and notice.
Facts are, with or without subsidies, it is becoming increasingly attractive for people to withdraw more and more of their demand for heating (electric-powered air heat pumps) and for electricity from the grid, supplying themselves with solar PV, and in a bit, and especially if net metering is withdrawn, having residential energy storage to carry over into the next generation day. Accordingly, the investments people are talking about making will inevitably be borne by a smaller and smaller piece of the energy marketplace. Raise the charge on the remaining sliver of energy these people/businesses draw upon from “the grid”, and you’ll incentivize them to null that. Doesn’t matter whether that charge is in the form of a special charge on solar PV customers (as is proposed in California and Arizona), or higher costs for getting back the energy they have contributed.
In the end “the grid” loses. The questions then are: (a) Does it make sense to take on debt load for the population of consumers when that base is going to be shrinking? (b) Does it make sense for “the grid” to alienate itself, and, effectively, disconnect itself from those sources of electrons out there who are, for the most part, contributing capital to an energy infrastructure bearing the finance cost? (c) Does it make sense to deal with a cost and price pinch for fossil fuels/explosive methane by jeopardizing compliance with the Global Warming Solutions Act? (d) Does it make sense to ignore the impacts of the very likely Carbon pricing that will come down, given that many corporations are calling for it, including fossil fuel companies? And, (e), does it make sense, if these explosive methane pipelines and measures are intended as a “bridge” to another kind of energy system, to allow them to depreciate on the 30-50 year time scale, when 10-15 years is likely to be more appropriate and reflect the actual time for cost recovery?
Without proper answers to these questions, and actions, such as the depreciation times, the actual prices for closing the price spike gap in winters are not likely to be expressed. Moreover, without that, alternative technologies, such as large scale energy storage to smooth out price spikes, won’t receive the capitalization from the Commonwealth which they otherwise would. And, in doing these things, the Commonwealth is, once again and largely, subsidizing a fossil fuel infrastructure, at the expense of zero Carbon non-nuclear sources.
As I wrote, it doesn’t matter to the eventual success of zero Carbon sources. What matters is how quickly it will happen, and that will be slower without liberal net metering, SRECs, WRECs, and the whole motley crew, than with these.
People who imagine the energy industry will be recognizable in 15 years are living in a make believe world of “how good things used to be”. Y’can’t fight exponential growth.
What a liar and to post something so stupid about a pot pipe only proves you are an a$$hole beyond compare!
Hey Maggie me a liar but the real liar is you driving in your fossil fueled car to your fossil fueled home and using all your fossil fuel conveniences…. put the pipe down Maggie and lead by exam